Privacy has become the market’s hottest property as increasing numbers of homes sell under the counter.
Last year a record 135,720 homes sold “off-market”, in other words without being publicly advertised on property portals, social media, in the newspaper or in estate agents’ windows. This is an increase of 60% on the approximately 84,000 properties that sold privately in each of the previous years. Off-market sales have historically been used where vendors have privacy or security issues and are typically most common for large and expensive houses. They have also been used to test pricing when owners don’t want to leave a digital footprint of any price changes.
However, since the coronavirus pandemic began, increasing numbers of homeowners in highly sought-after locations, such as the London commuter belt, have been using them to tap into red-hot demand from buyers faced with record stock shortages. Off-market sales can allow owners to sell quickly at a high price – if their property doesn’t attract a buyer this way, vendors are then able to advertise more widely at a later date. This secretive way of selling homes has also appealed to vendors who don’t want the upheaval of multiple buyers turning up for viewings and those who have safety worries due to Covid.
Even though the stamp duty holiday was tapered at the end of June last year, and was removed entirely at the end of September, the proportion of homes in Great Britain selling off-market grew from 8% in the second quarter to 9% in the third quarter and to one in 10 homes by December.
In London, where the market has been more sluggish since the pandemic began, off-market sales have become even more popular. One in five properties were sold off-market in 2021, the highest proportion on record and almost double the 11% of homes sold off-market in 2019, before the pandemic hit. Of the homes in the capital sold for more than £1m, a quarter sold without being widely advertised last year.
As stock levels have fallen, the most motivated buyers have also increasingly been gravitating towards off-market sales. Seeing a property before it has been formally marketed – with photographs taken and floorplans drawn up – and agreeing a sale with the vendor before it has been widely advertised means buyers can avoid bidding wars despite potentially paying a premium to keep the home off the open market.
It might sound counter intuitive that sellers can achieve a better result without having their home advertised publicly. But discretion is often the better part of valour. Discretionary buyers and sellers make up a relatively large proportion of this market, often with very specific requirements or only willing to shake hands on a price where there’s little or no room for negotiation.
This can mean some homes are quietly marketed for longer than it takes to sell the average home. And very often in these cases sellers aren’t keen on advertising publicly for their metrics to be tracked. But by the same token, buyers are often more motivated to secure a home which they know may well be advertised more widely down the line if the seller doesn’t achieve the price they want.